3. Passing of risk according to German law A. Introduction
B. Passing of risk when the contract involves carriage of goods
C. Passing of risk with goods in transit
D. Passing of risk in residual cases
E. Passing of risk in non-accidental cases

The CISG has an important meaning in contemporary international trade. Its unifying effect is especially
important. The CISG aims at the unification of the subject matter of the law applicable to international
sale of goods. It contains rules on subject matters, which apply to the conclusion of such contracts of sale
and their settlement instead of the otherwise applicable rules according to international conflict law.

The CISG is composed of four parts:

Part I: Sphere of application and general provisions

Part II: Formation of the contract

Part III: Sale of goods

Part IV: Final provisions

This commentary compares the passing of risk according to the CISG and German law. The CISG deals
with the passing of risk in Chapter 4 (articles 66 through 70). German law deals with this in §§ 275, 323
et seq., 446, 447 BGB.

Chapter 1 provides an introduction to the basic rules of the passing of risk according to the CISG. The
separate provisions are explained: passing of risk when the contract involves the carriage of goods (art.
67); passing of risk with goods in transit (art. 68); passing of risk when the goods are in storage or when
the goods must be collected by the buyer at the seller's place of business, or when the seller has to deliver
the goods to the buyer or hand them over at a place other than his place of business (art. 69). The emphasis
is on the passing of risk to pay the price. The passing of risk to perform is however also relevant and is
explained in connection with each article.

The conditions on the passing of risk are concerned with accidental loss or damages only. In the last part
of chapter 1, the conditions which apply when the goods are not accidentally lost or damaged are
considered. What happens when goods have been delivered which are not in conformity with the contract,
are explained as well.

As a special item to each article, the problems that arise in selling unascertained goods are discussed.
Selling unascertained goods means that the object of the sale is not a specific, individual or seperate good
(species), but just a generally defined good, for example defined by its kind, amount or weight. The
identification of this kind of goods to the contract is crucial for the passing of risk.

Chapter 2 discusses Incoterms. These terms are very important in international trade and they are often
utilized, because the CISG constitutes no positive law. Incoterms define the passing of risk in their own
way, according to their own rules. The most frequently utilized Incoterms, that is, FOB (free on board) and
CIF (cost, insurance, freight), are discussed.

Chapter 2 will deals with the international methods of payment, especially with documentary credits. The
contemporary international sale of goods often takes place by container transport. Chapter 2 therefore
contains a small insertion about the container system in connection with the passing of risk.

Chapter 3 discusses the German system of the passing of risk, which is regulated in §§ 275,323 et seq.
and specifically in §§ 446,447 of the Civil Code (BGB). The sequence of chapter 1 is be maintained: first
the passing of risk when goods are carried; then the passing of risk with goods in transit; and finally the
residual cases. As a special item the selling of unascertained goods is discussed as well. At the end, the
non-accidental loss of or damage to the goods is discussed.

Finally, Chapter 4 compares the CISG and German law and summerizes the differences and corresponding
features and puts them in a comparative perspective.

The moment of concluding the contract is not very suitable to determine the passing of risk in
international sales. Usually, international sales involve the selling of unascertained goods to faraway
destinations. At the time of conclusion of the contract, the goods are often not identified or even produced.

The moment of passing of ownership is not very suitable as well, because this moment is regulated
differently in every country. Ownership and passing of risk have nothing to do with each other, because
ownership affects first of all and foremost third parties, the passing of risk however, affects the contracting
parties. Ownership is an absolute right, which the owner can invoke against anybody. The risk passes
without taking into account who owns the goods. The passing of ownership is not regulated by the CISG
according to art. 4(b).

Therefore, the moment in which the goods are handed over remains. This provision complies with the
reciprocal nature of sales contracts, since by handing over the goods, the seller has fulfilled his obligations
and earned the price. A practical argument advocates this solution as well, namely the parallel course of
risk and of possession of the goods. The one who is in the better position to protect the goods against
damage or who can sue for damages and who is usually insured, or at least can get insurance easily, has to
bear the risk.

There is also the practical relevance of the question who should bear the risk of accidental loss of or
damage to the goods. This risk is covered or reduced by insurance. However, the bearing of the risk has
several disadvantages as well, for example the burden to see to arrange for insurance and the burden to
deal with the insurance company in case of loss or damage. Furthermore, certain risks cannot be insured at
all.

III. Risk of non-performance

1. Regulation in the CISG

Piltz takes the position that articles 66 through 70 CISG not only regulate the passing of risk but the risk
of non-performance as well. In his opinion, this follows from a comparison with the effects of delivering
goods which do not comply with the conditions as stipulated in the contract and the fact that many legal
systems do not distinguish between the risk of having to pay the price and the risk of having to redeliver.

This argument is not convincing. The CISG is intended to unite the law of sales and therefore it is of no
use to look at national legal systems. Besides, one cannot place the consequences that follow out of an
accidental loss of or damage to the goods for the seller's obligations to perform, under the term
"Leistungsgefahr/risk of non-performance". This would be inconsistent with the whole system, since these
problems belong to the area of seller's and buyer's obligations and of breach of contract, and are thus to be
solved according to these provisions.

There is no connection between delivery and the passing of risk. The passing of risk is not connected to
the act of delivery, but is regulated independently in articles 66 et seq. CISG. Therefore, current opinion is
to be accepted, that is, that articles 66 through 70 CISG regulate the passing of risk only.

2. Passing of risk to deliver

The CISG does not use the term "passing of risk of non-performance" (Leistungsgefahr) as does German
law. One does not find this notion in the text. A better term would be the passing of the risk of having to
deliver once more, although the goods have been lost or damaged by accident. There is no provision that
regulates the question which influence the loss of or damage to the goods has on the obligation of the
seller to deliver the goods. Is the seller discharged from his obligation to deliver the goods, or does he
have to re-deliver, that is, does he have to deliver once more the goods as stipulated in the contract? This
question is very important in connection with selling unascertained goods, for here the seller is able to
fulfill his obligation to deliver, as long as there are other goods available from the unascertained mass.
The seller has fulfilled his obligaton to deliver only after the identification of the goods to the contract.
Articles 66 et seq. regulate expressly the passing of risk and are not applicable on the passing of the risk to
deliver/perform.

The solution is to be found in articles 31 to 36 and 79, 80 CISG. The seller is discharged from his
obligation to pay damages when the goods are lost or damaged by accident, according to art. 79(1),(2),(5).
However, the seller remains in principle obligated to deliver the contract goods, since he has not yet
fulfilled his obligation to deliver. Not until the seller has fulfilled his obligations to deliver as defined by
arts. 31-34 CISG, meaning that he has done everything necessary to fulfill his obligations to deliver, will
he be discharged from the obligation to re-deliver (in German law: will he be released from his
"Leistungspflicht"), since from that moment on, the buyer bears this risk.

When the goods are just damaged, article 36 CISG applies since damage of the goods constitutes a breach
of contract. According to art. 36(1) CISG, the seller is liable for any lack of conformity which exists at the
time when the risk passes to the buyer, even though the lack of conformity becomes apparent only after
that time. The seller is also liable for any lack of conformity which occurs after the time indicated in the
preceding paragraph and which is due to a breach of any of his obligations, art. 36(2) CISG.

In the next part, the moment in which the seller has fulfilled his obligation to deliver, will be explained for
every provision. The content of the obligation to deliver varies with the kind of contract that has been
concluded and the responsibilities for the seller that follow out of that kind of contract. Art. 31 CISG
determines this when the contracting parties did not agree upon something else, or when something else
does not follow from customs or practices between them. Arts. 32 (special obligations for the seller
concerning the carriage of goods), 33 (time of delivery) and 34 (handing over of documents) CISG have to
be taken into account as well.

Example: A German seller, who has his place of business in Chemnitz, sells a machine tool FOB
Hamburg to an English buyer. On the way to Hamburg by rail (meaning before the place of delivery and
before the place where the risk passes) the machine is destroyed in a traffic accident, caused by a truck
driver at a crossing (therefore, accidental). According to German law and according to the CISG as well,
the risk is still with the seller, meaning that the buyer does not have to pay the price for the lost machine.
Does the seller have to deliver another machine? Not according to § 275 BGB, but according to the CISG
he does, because he had not fulfilled his obligation to deliver.

B. Article 67: Passing of risk when the contract involves carriage of the goods

I. Passing of risk

"If the contract of sale involves carriage of the goods and the seller is not bound to hand them over at a
particular place, the risk passes to the buyer when the goods are handed over to the first carrier for
transmission to the buyer in accordance with the contract of sale. If the seller is bound to hand the goods
over to a carrier at a particular place, the risk does not pass to the buyer until the goods are handed
over to the carrier at that place."

Article 67 deals with the passing of risk in case the contract asks for forwarding of the goods. Primarily,
the handing over of the goods at the place determined by the contracting parties is decisive. When no
particular place is determined, the handing over of the goods to the first carrier decides.

1. Prerequisites

a) Handing over of the goods at a particular place

According to art. 67(1)(ii) when the seller has to hand over the goods at a particular place, the risk does
not pass to the buyer until the goods are handed over to the carrier at this particular place (Incoterms
especially regulate particular places). The seller is not bound to hand over the goods himself. Art. 67(1)(ii)
applies without taking into account whether the seller himself (or his employees) transports the goods for
the first part of the way or uses an independent carrier. It suffices that the goods are placed at the disposal
- by whomsoever - of the carrier at the particular place or are already in the carrier's control (in case of a
previous handing over of the goods). The goods must be placed in the carrier's care or control.

The particular place cannot be identical to the place of forwarding nor to the place of final destination,
since in these cases art. 69 applies. The main application of art. 67(1)(ii) CISG will be the carriage of
goods overseas, e.g., the seller, with his place of business inland, agrees upon delivery from seaport X.
The first-carrier rule of art. 67(1)(i) does not apply; according to art. 67(1)(ii) the risk does not pass until
the goods are handed over to the carrier at seaport X. The carriage over land takes place at the seller's risk,
the carriage overseas at the buyer's risk.

b) Handing over the goods other than at a particular place

When the seller is not bound to hand over the goods at a particular place, the risk passes to the buyer at the
time in which the goods are handed over to the first carrier for transmission to the buyer in accordance
with the contract of sale (art. 67(1)(i)).

The requirement that the goods are handed over "in accordance with the contract of sale", only states that
there has to be an agreement upon carriage in the contract, and not that the passing of risk depends on the
observance of all the stipulations of the contract.

The basic rule for contracts involving carriage of goods is that the risk passes to the buyer at the moment
in which the goods are handed over to the first carrier. In cases of combined transport (e.g. international
transport and especially with container transport), the risk passes with handing over the goods to the first
carrier. The complete transport takes place at buyer's risk. Investigations about when and where an
eventual damage occurred are herewith avoided. This provision is especially fitting for modern container
transport.

The carrier must be self-employed and independent. When independent assistants of the buyer take over
the goods from the seller for carriage to the buyer, art. 67 CISG is not applicable. In this case art. 69(1)
and (2) apply, because this involves a "long distance or local sale".

Handing over the goods to employees of the seller, who are to carry the goods to the buyer, does not
suffice according to current opinion. Since handing over the goods to the carrier means giving up the
control over the goods, this assumes that the carrier is self-employed and independent.

It remains doubtful, whether handing over of the goods to a forwarding agent suffices. Opinions differ
between several cases. A forwarding agent can limit himself to the organization of the transport and
contract a carrier. The risk passes when the goods are handed over to this carrier. The forwarding agent
can conduct the carriage himself by his right of entering into the contract (Selbsteintrittsrecht): the risk
passes at the time of entrance into the contract. Finally, the forwarding agent has the opportunity to take
over the carriage at fixed costs (zu festen Gebühren). This is the moment in which the risk passes in this
case.

Another argument is that the risk always passes to the buyer when the goods are handed over to a
forwarding carrier. This opinion is to be preferred, since the decisive factor for the passing of risk is who
has the goods at his disposal. The person who has the goods in his care can prevent their damaging or loss.
When the contract involves carriage of the goods, whether the seller gives up the immediate care of the
goods or not is decisive. When the seller hands over the goods to a forwarding agent, he loses any
possibility to take care of the goods. For that reason, the handing over of the goods to a forwarding agent
is in conformance with the prerequisites of art. 67(1) CISG.

c) Documents

Under art. 67(1)(iii) the fact that the seller is authorized to retain documents controlling the disposition of
the goods does not affect the passing of the risk. This restates the independence between the passing of
risk and the passing of ownership.

d) Identification of the goods to the contract

Art. 67(2) determines that the risk does not pass to the buyer until the goods are clearly identified to the
contract (compare art. 32(1) CISG). The seller has to prove that he did not just think about the part he
wanted to deliver out of the unascertained mass, but that he marked the goods objectively as being "clearly
identified to the contract". There are several ways in which the seller can do this: by placing markings on
the goods; by shipping documents (e.g., bill of lading); by notice given to the buyer or otherwise. When a
necessary identification notice is not made before the fulfilment of the prerequisites of art. 67 et seq., the
risk passes at this later moment in which the identification has been made. Art. 67 CISG applies in
principle to ascertained goods.

2. Special features for the sale of unascertained goods

a) Cases of selling unascertained goods

In case of carriage of goods overseas, an identification to the contract often fails, e.g., when the seller
forwards the goods without indicating the buyer as the recipient, or when he unloads an unascertained
mass of goods for the fulfillment of several contracts of sale.

In trading raw materials, a ship, loaded with oil for example, is often sent in the direction of Europe
without having a buyer, and the final destination will not be determined until a buyer (or buyers) has been
found. Another possibility is the case in which collective freight entails goods for the fulfillment of
several different contracts of sale and is not divided between the buyers until the goods have reached their
place of destination, the country of the recipients.

These are cases of selling unascertained goods, where the goods are just generally defined. The sale does
not involve specific, identified goods. The seller is not obliged to deliver specific goods out of the
unascertained mass, but he has the right to choose out of this collective cargo which goods he wants to
deliver.

The seller can still ask for the purchase price in case of accidental loss or damage when the prerequisites
of articles 66 through 69 CISG are fulfilled. That the goods are damaged or lost by accident and that they
have been identified to the contract is important, because the risk cannot pass to the buyer if the goods are
not identified under art. 67(2) CISG.

b) Identification of the goods

The identification of the goods to the contract (Konkretisierung), which arts. 67-69 require for the passing
of risk, can be carried out in the ways mentioned in art. 67(2). See above in B.I.1.d.

As a rule, the shipping documents, a bill of lading or (sea)waybill, will determine the fulfillment of which
contract is involved with the carriage. The risk passes at the moment in which the goods are handed over
to the carrier (art. 67(1)).

In the case of a collective cargo or of a shipment without identifying the buyers, the identification of the
goods will be performed by sending a notice of consignment (compare with art. 32(1) CISG). This notice
takes effect at the time of dispatch, according to art. 27 CISG. The risk passes ex nunc to the buyer with
the mere dispatch of the notice and not at the time of access of the notice to the buyer. This could make
investigations necessary about where and when an eventual damage occured. The buyer, however, is
interested in goods without defects; the seller in receiving the purchase price. For this reason the seller
will, out of his own interests, send the documents as soon as possible to the buyer or his bank.

At what time however, does the risk pass, when a collective cargo containing goods of the same kind,
e.g., oil or wheat, is shipped in one container or on one ship for several recipients and the container is only
identified for all?

One opinion states that identification of the collective cargo suffices. The buyers form an association for
the risk. They carry the risk of damage or loss, which occurs during the transportation, in the ratio of their
share in the collective cargo.

Another opinion is, that this is not sufficient for a clear identification, which follows out of the wording
and genesis. The identification, and therefore the passing of risk, does not take place until the goods are
divided between the buyers at the place of destination. If the goods are lost or damaged on the way over
there, the buyers are released from their obligation to pay the purchase price.

II. Risk of non-performance

1. Ascertained goods

In the case the contract of sale involves carriage of the goods, the seller has fulfilled his obligation to
deliver under art. 31(a) when he hands over the goods to the first carrier for transmission to the buyer. The
obligation to deliver means the performance by the seller of all acts which are necessary to fulfill his
obligation to deliver. The provision determines the place of delivery in case this place is not stipulated
differently in the contract or defined differently by custom or practices. When the place of delivery is
stipulated in the contract or otherwise defined, it would be logical to conclude that the seller has fulfilled
his obligation to deliver when he has handed over the goods to the carrier at that particular place.

The notion "handing over" means that the carrier takes possession of the goods and that the seller[5]
concludes a contract involving carriage with the carrier (art. 32(2) CISG). The seller also has to identify
the goods to the contract (art. 32(1): Konkretisierung) and hand over the documents relating to the goods
(art. 34 CISG). The goods must be delivered within the delivery time, of course (art. 33). From the
moment in which the seller has fulfilled all his obligations, he is released from his obligation to deliver
once more when the goods are lost or damaged by accident.

There is no problem in this area for the selling of ascertained goods, since this involves already specific,
identified goods. The risk of non-performance passes to the buyer at the moment in which the goods are
handed over to the carrier and when the prerequisites of arts. 33, 34 CISG are fulfilled.

2. Unascertained goods

In selling unascertained goods, the moment of identification is decisive for the passing of the risk of non-performance. As long as delivery out of the unascertained mass is still possible, impossibility cannot
occur. The seller is able to deliver another good out of the mass if the goods get lost. When the
identification has taken place and the seller owes a specific, identified item, impossibility can occur when
this item gets lost.

The division of the risk of non-performance is to be deduced from the content of the obligation to deliver
under arts. 31-36 CISG, as explained in A III.2. In handing over the identified goods to the carrier, the
seller has done everything to fulfill his obligation to deliver, because identification is one of the
prerequisites for fulfillment under art. 32(1) CISG. This is the same provision as in the case of selling
identified goods (arts. 31(a) and 32(1) CISG). The obligation of procurement ends for the seller of
unascertained goods when he owes identified goods. Therefore, only after identification does the question
become relevant, whether the seller can still claim the purchase price. The risk of non-performance passes
at the latest with the passing of the risk to the buyer. One could think of an earlier passing, but a later
passing of the risk of non-performance is unthinkable.

How does identification of the goods take place in the case of selling unidentified goods? The
identification of the goods to the contract can be carried out by placing markings on the goods, or by
declarations in the documents relating to the goods. When the carrier issues an identifying document, e.g.,
bill of lading, the seller has fulfilled his obligation to deliver in handing over the goods to this carrier
(Konkretisierung/identification, art. 67(2) and art. 32(1) CISG). Should the identification not have been
carried out by markings on the goods or declarations in the documents, a notice of consignment of the
goods must be provided. The seller has fulfilled his obligation to deliver at the moment in which he
dispatches the notice (art. 27 CISG), because the notice constitutes the identification. At the same time in
which the risk passes, the risk of non-performance passes to the buyer as well.

C. Article 68: The passing of risk with goods in transit

I. Passing of risk

1. Passing of risk at the time of conclusion of the contract

Article 68 CISG determines the passing of risk in selling goods which have already been handed over to
an independent carrier for carriage at the time of conclusion of the contract. The basic rule of art. 68(i)
CISG states that the risk in respect of goods sold in transit passes to the buyer from the time of the
conclusion of the contract. The risk for goods in transit (rolling, floating, flying goods) passes ex nunc to
the buyer. This provision can cause serious practical problems, since it will normally be impossible to
determine the moment in which the damage or loss occured; this is especially the case when the goods are
forwarded in containers. In fact, this risk lies with the seller who, in case of a difference of opinion, will
have to prove that the risk had already passed to the buyer, if he wants to release himself from his liability.

Example: A freight of wheat is carried from Rotterdam to a trader in Calcutta. The trader sold the freight to a buyer in Singapore on
October 15th, 1995. When the wheat arrives on October 30th, 1995, it is established that water has come through a defective hatch and
that accordingly the wheat has partly perished. However, it is impossible to determine at what time exactly the damage occured: before
the selling by the trader to the buyer in Singapore or afterwards. Who has to bear this risk?

2. Passing of risk at the time of handing over the goods to the carrier

As an exception, art. 68(ii) states a retroactive (ex tunc) passing of the risk:

"However, if the circumstances so indicate, the risk is assumed by the buyer from the time the goods
were handed over to the carrier who issued the documents embodying the contract of carriage."

The buyer takes over the risk from the time in which the goods were handed over to the carrier who issued
the documents embodying contract of carriage. It is not necessary for the documents to entitle a disposal
of the goods. It suffices that the documents give evidence of the contract of carriage. In selling floating
goods, this will usually be a bill of lading. However, a seawaybill will suffice as well. When there are no
documents at all, the provision is unapplicable.

"Circumstances" mean objective circumstances, independent of any legal arrangements. Here, one
essentially considers the existence of transport insurance, since such insurance limits the buyer's risk
fundamentally. That the buyer is insured for the passed time of carriage as well is a prerequisite. If the
seller did not insure the goods and the buyer takes insurance, he can take insurance retroactively if he
takes over the risk retroactively, because he will then have an insurable interest. The buyer must be in
good faith, meaning that he has no knowledge of already occurred damage. When the buyer takes such
insurance, art. 68(ii) is applicable. When the insurance only insures the risks from the time of conclusion
of the contract or when the goods are not insured at all, the basic rule of art. 68, first sentence, CISG
applies and the risk passes at the time of conclusion of the contract. This can cause arguments about the
time of occurance of any damage. In these cases, the contracting parties often agree upon the CIF-clause.
In that case there is transport insurance (more details in chapter 2).

The retroactive passing of the risk under art. 68(ii) ought to apply only in favor of a seller acting in good
faith. Therefore, the third sentence states that, if at the time of the conclusion of the contract of sale the
seller knew or ought to have known (meaning: negligently did not know) that the goods had been lost or
damaged and did not disclose this to the buyer, the loss or damage is at the risk of the seller. He cannot
charge for the purchase price anymore.

3. Extent of the risk

Several problems arise in defining the extent of the seller's risk. For which part of the loss or damage is the
seller responsible, meaning, for which part will the buyer be released from his obligation to pay the
purchase price? Does the seller only have to carry responsibility for the damage that has already occured at
the time of conclusion of the contract and that he knew or ought to have known, or does he have to stand
in for further damage as well, which occured after the conclusion of the contract but of which he knew
nothing and did not need to know?

One opinion is, that the seller should only be liable for the damage which had already occurred at the time
of conclusion of the contract and which he knew or ought to have known. Another opinion states, that the
seller is liable for all damage which occurs after the conclusion of the contract. That the seller should bear
the risk as far as the realization of the risk caused loss of or damage to the goods, of which the seller knew
or ought to have known is decisive. For this part, the seller does not deserve the purchase price and
remains obligated to perform.

4. Identification and impossibility

Article 68 does not contain the prerequisite that the goods must be clearly identified to the contract, as do
articles 67(2) and 69(3) CISG. An anology, however, is generally accepted. Article 68 CISG applies
basically to ascertained goods (Spezieskauf). The goods must be ascertained or identified for art. 68 CISG
to apply. As with the sale of goods by carriage, the identification of the goods to the contract often takes
place by declarations in the shipping documents (usually a bill of lading) or by sending a notice of
consignment, with which the risk passes ex nunc.

What happens when the goods were already lost at the time of conclusion of the contract? Is the contract
of sale still valid? The CISG does not regulate the invalidity of contracts (art. 4(a)), and according to
German law, a contract aimed at an impossible obligation is void (§ 306 BGB). However, it follows from
art. 68, that in applying the first sentence, the legal consequences must be determined under the CISG. The
seller keeps his claim to the purchase price, but not if he knew of the impossibility or ought to have
known.

5. Special features for selling unascertained goods

One has to differ between two applications of art. 68 CISG: when the seller is allowed to provide a freight
of unascertained goods according to the contract or trade usages, the risk passes to the buyer at the
moment stipulated in art. 68 CISG, i.e., at the time of conclusion of the contract (1st sentence) or at the
time of handing over the goods to the carrier (2nd sentence). The buyers bear an eventual loss
proportionately.

When the provision of a freight of unascertained goods is not allowed, the risk does not pass to the buyer
until the goods have been clearly identified to the contract.

II. Risk of non-performance

1. Ascertained goods

In case the contract of sale does not involve carriage, the seller has fulfilled his obligation to deliver under
art. 31(b) CISG (long distance sale/Fernkauf, sale of goods in storage and in transit [6]) in placing the
goods at the buyer's disposal at "that" place or at the place where the seller has his place of
business according to art. 31(c) CISG (local sale/debt collectible at debtor's domicile by the
creditor; more details in D). The goods are placed at the buyer's disposal when the seller has done
everything necessary to enable the buyer or his representatives to pick up the goods.

In order to do this, the seller has to sort out the goods, and make them available to the buyer,
informing the buyer of this (art. 27 CISG). It will not be necessary to sort out the goods when this is
possible at the time of arrival of the buyer without any further complications. For example, when
1,000 boxes of preserved food have been sold, it suffices that there is a supply of enough boxes
available at the place and when the buyer can serve himself, when there are at least 1,000. When a
document controlling the disposition of the goods has been issued, which legitimates the holder to
receive the goods from the carrier (e.g., bill of lading, storage certificate), the seller fulfills his
obligation to deliver in handing over that document to the buyer. When there is no such document,
the seller has to instruct the carrier to hand over the goods to the buyer. The obligation to deliver is
fulfilled as soon as the instruction reaches the carrier, in whose care the goods are at that time. That
the carrier is really obliged by the instruction to hand over the goods to the buyer at the place of
destination is a prerequisite.

When floating or rolling goods are sold, this usually involves the sale of identified or at least
unidentified goods to be drawn from a specific stock (freight on a ship or in a wagon) and the
contracting parties usually know on which ship or in which wagon the goods are. This does not
constitute any problems, because it involves ascertained, identified goods. The risk passes to the
buyer at the time in which the goods are placed at his diposal and the notification thereof has been
dispatched.

The term "placing at the buyer's disposal" has a special meaning when the sale of goods in transit is
involved, which has to do with the kind of sale. The seller has to place the goods at the buyer's
disposal "at that place", which is the place where the ship or wagon is at the time of the contract.
The seller has done everthing necessary to fulfill his obligation to deliver when he enables the
buyer to take over the goods at the place of destination. This can be done, as explained above, by
handing over to the buyer a bill of lading or similar document which instructs the carrier to hand
over the goods to the buyer at the place of destination or in which the seller assigns his rights to the
goods in favor of the buyer.

In cases where the risk passes at the time of conclusion of the contract, there can be a problem,
namely if the seller fulfills his obligation to deliver - the handing over of the bill of lading -
afterwards. In any event, the seller would not be obliged to deliver once more when the goods are
damaged or lost in between the conclusion of the contract and the handing over of the documents,
because only the goods he owes the buyer (Species) are involved. The identifying bill of lading (or
the instruction to the carrier) has already been issued at the time of loading.

2. Unascertained goods

The seller basically fulfills his obligation to deliver by placing the identified goods at the buyer's
disposal, in the sense explained above. Usually, the sale of goods in transit involves ascertained/identified goods. It remains unclear when the risk passes in case of sale of unidentified goods in
transit. It seems logical to say that when the seller is allowed to provide a mass of unidentified
goods, he has fulfilled his obligation to deliver by doing so. "Placing the goods at the buyer's
disposal" means, that the buyer is in a position to take control over the goods. This is often made
possible by sending a bill of lading or by instruction to the carrier to hand over the goods to the
buyer thus solving the problem, since these acts constitute identification of the goods.

When the seller is, however, not allowed to provide the buyer with a mass of unidentified goods, he
has not fulfilled his obligation to deliver until the goods are identified. At that time, the risk of non-performance passes to the buyer, because only then has the seller fulfilled his obligation to deliver.
The risk passes at the same time, since only at that time are the goods identified to the contract (art.
67(2), art. 69(3) CISG by analogy). This means that the risk might not pass until the goods are
delivered at the place of destination.

D. Article 69: Passing of risk in residual cases

I. Area of application

Article 69 CISG regulates primarily the passing of risk in the cases not regulated by articles 67 und
68. This means, it deals with local sales (Plautzkauf)/debt collectible at debtor's domicile, the sale
of goods in storage (collecting the goods at a warehouse) and the long distance purchase
(Fernkauf)/debt payable at debtor's domicile (another place, e.g., buyer's place of business).

Article 69(1) covers with the local sale (Platzkauf) the case of a debt collectible at the debtor's
domicile (Holschuld). This article applies namely only to cases which are not covered by articles
67, 68 CISG and it follows from the special provision of art. 69(2) that this 2nd paragraph applies
to the passing of risk in case of the sale of goods in storage and in case of a distance purchase
(Fernkauf). Therefore, only the case of a local purchase remains for art. 69(1).

II. Art. 69 (1): Local sales

1. Passing of risk

a) Prerequisites

When the goods are to be taken over at the seller's place of business, the risk passes to the buyer,
according to art. 69(1)

"when he takes over the goods or, if he does not do so in due time, from the time when the goods
are placed at his disposal and he commits a breach of contract by failing to take delivery."

To take over the goods means to take actual, physical possession. This can also be done by
representatives of the buyer (forwarding agent, carrier). Placing the goods only at the buyer's
disposal does not suffice.

When the buyer does not take over the goods (default of acceptance/Annahmeverzug), the risk
passes anyway, as soon as the seller has placed the goods at the buyer's disposal at his place of
business and the buyer commits a breach of contract by not taking over the goods. The seller has to
place the goods at the buyer's disposal. He has done so when he has made all the necessary
preparations, especially identified the goods, and informed the buyer about this. The buyer must be
in the position to transport the goods without further ado.

The buyer must have committed a breach of contract by failing to take delivery. This is the case,
when the time for delivery fixed in the contract is due or, in case nothing is stipulated in the
contract, a reasonable time has passed since the notification that the goods are placed at the buyer's
disposal has reached the buyer. It remains arguable, whether just the failure to take delivery by the
buyer causes the risk to pass or whether other breaches of contract which cause the failing to take
delivery, cause the passing of the risk as well. For example, when the buyer does not open a
documentary credit as stipulated in the contract or, when the buyer does not give the necessary
forwarding instructions.

Hager prefers the extensive opinion, which includes breach of cooperative obligations by the buyer
into the facts that cause the risk to pass. Rudolph and Enderlein/Maskow/Strohbach criticize this
opinion as being too extensive and limit the passing of risk to cases of failure to take delivery by
the buyer. They hold to the text of article 69(1) CISG.

It seems preferable to let the risk pass to the buyer, when the seller is unable to pass the risk
according to the general provisions because of the buyer's defaulting conduct (that is, not just
failure to take delivery, but for example also when the buyer fails to mention the vessel for an FOB
sale). The seller has no possibilities from this time to influence the sale of the goods and it would
be unjust to put the risk on the seller, when the buyer is in default.

b) Identification

According to art. 69(3) CISG the risk does not pass to the buyer until the goods have been clearly
identified to the contract. The goods must be identified before art. 69(1) CISG can apply. The
identification usually takes place by sorting out of the goods or by placing markings on the goods.
The risk does not pass when the identification does not take place, except when the seller is
allowed under the contract to deliver a part of a collective cargo.

2. Risk of non-performance

The seller has fulfilled his obligation to deliver under art. 31(c) CISG when he has placed the goods
at the buyer's disposal, meaning that he has sorted out the goods, has provided them for the buyer,
and has notified the buyer thereof (art. 27 CISG). The buyer must be able to transport the goods
without further ado. At this time, the risk of delivery passes to the buyer and the seller is released
from his primary duty. In case of an obligation in kind, this is exactly the same, since the seller
identifies the goods in placing them at the buyer's disposal, namely the sorting out of the goods for
the buyer. This is a prerequisite for "placing the goods at the buyer's disposal".

According to art. 69(1) CISG (a local sale), the risk does not pass to the buyer until he takes over
the goods or, if he does not do so in due time, from the time when the goods are placed at his
disposal and he commits a breach of contract by failing to take delivery. Here, there could be a
time gap between the fulfillment of the obligation to deliver and the passing of the risk. When the
goods are damaged or lost by accident in the meantime, the seller is no longer obliged to re-deliver
since the risk of non-performance has already passed to the buyer by sending the notification. The
buyer is no longer obliged to pay the purchase price since that risk has not yet passed to him.

III. Art. 69(2): Residual cases

When the buyer is bound to take over the goods at a place other than a place of business of the
seller, according to art. 69(2) CISG the risk passes to the buyer when delivery is due and the buyer
is aware of the fact that the goods are placed at his disposal at that place (compare with art.31 (b)).

This provision in art. 69(2) CISG comprises the sale of goods in storage and the sale of goods for
which another place of fulfillment has been agreed, e.g., sales out of the warehouse (ab Lager),
DEQ (ab Kai), EXW (ab Werk) (see chapter 2). It also covers the case in which delivery has to
take place at the buyer's place of business or a third place (long distance sale/Fernkauf). Such a
contract is identified by the clauses "frei haus" or "ex ship".

1. Long distance sale

a) Prerequisites

The passing of risk requires delivery being due, that the goods have been placed at the disposal of
the buyer at the agreed place and that the buyer is aware of this. The goods must also be identified,
according to art. 69(3). This last prerequisite also applies to the sale of goods in storage and will be
discussed for both kinds of sale in III.3, as will be the passing of the risk of non-performance in
III.4.

aa) Delivery is due

First of all, the maturity of delivery [7] will be explained. Under art. 33 CISG, when the contracting
parties have fixed a date in the contract or when the period for delivery results from usage or
practice, the seller has to place the goods at the buyer's disposal at that time (art. 33(a)) or within
that period (art. 33(b)). If there is no such provision contracted, the seller has to place the goods at
the disposal of the buyer at the warehouse, place of manufacturing or at the place of destination
within a reasonable time after the conclusion of the contract. In case the buyer does not take
delivery and thus commits a breach of contract, the risk of non-performance remains with the seller
until he has placed the goods at the disposal of the buyer. When the goods are placed at the buyer's
disposal too early, the risk does not pass to the buyer until delivery is due.

bb) Placing the goods at the disposal of the buyer

Contrary to art. 69(1), the risk does not pass at the time in which the goods are actually taken over
by the buyer, but already at the time in which the goods are placed at his disposal when delivery is
due. The tying to the act of placing the goods at buyer's disposal is justified by the argument that
the seller normally does not insure goods which are not in his care, or at least when the seller is not
in a more favorable position than the buyer to insure the goods, to watch over them, and to claim
damages from the insurance company. In case of a long distance sale of goods, the seller places the
goods at the disposal of the buyer at the place of business of the buyer or at a third place and he
does not have the goods in his care. The goods do not remain on his premises.

The notion of "placing at one's disposal" in art. 69(2) corresponds to the one in art. 69(1)(ii) CISG
(D II.1). An important case of application of the 2nd paragraph is the sale of goods, in which the
place of fulfillment is the place of business of the buyer, the ship in the port of destination or the
place of business of the manufacturer. In these cases the risk passes to the buyer when the seller
offers the goods to the buyer at that place. When transport documents are required for handing over
the goods, the goods are not placed at the disposal of the buyer until these documents have been
handed over to him.

cc) Awareness of the buyer

The buyer must be aware of the fact that the goods are placed at his disposal. This awareness must
be positive and can be brought about by the handing over of documents or by any other (informal)
message. For the passing of risk, the moment in which the message reaches the buyer is decisive
and not the moment in which it is sent by the seller. The notification travels at the seller's risk,
contrary to the provision of art. 27 CISG.

2. Sale of goods in storage

Art. 69(2) CISG also governs the case of taking over the goods which are stored in a warehouse.
The goods are placed at the disposal of the buyer when the storekeeper acknowledges the buyer's
right of possession or when documents are handed over to the buyer which do not just constitute an
instruction of the seller to the storekeeper to hand over the goods to the buyer, but which establish a
real right of possession for the buyer as holder of the documents, to claim the handing over of the
goods (e.g., a warehouse warrant to order). The risk passes to the buyer at the time of acknowledgement of the right of possession or at the time of handing over the document. The buyer must be in
the position to collect the goods from the storekeeper.

A delivery note does not suffice to bring about the passing of risk, because it only constitutes an
instruction. When the seller hands over such a document, the goods are stored at his risk until the
buyer contacts the storekeeper and the storekeeper acknowledges his right of possession. The risk
passes to the buyer with the storekeeper's statement that he will follow the instruction to hand over
the goods to the buyer.

The other prerequisites are already discussed in the long distance sale above, and are the same for
goods in storage.

3. Identification with long distance sale/sale of goods in storage

Art. 69(3) applies here as well and therefore the goods must be identified before the risk can pass.
With the distance sale, identification often takes place inevitably, because the seller is bound to
offer the goods to the buyer at the buyer's place of business or at an agreed place. With the sale of
stored goods, the passing of risk usually leads to identification of the goods inevitably. For the
passing of the risk the storekeeper must acknowledge the buyer's right of possession, or the seller
needs to hand over documents to the buyer, which constitute a promise by the storekeeper to hand
over the goods.

4. Risk of non-performance with distance sale/sale of goods in storage

According to art. 31(b) CISG (cases of long distance sales and sales of stored goods), the seller
fulfills his obligation to deliver by placing the goods at the disposal of the buyer at "that" place,
meaning that he sorts out the goods, makes them available to the buyer and notifies the buyer
thereof. With the sale of stored goods, the goods are placed at the disposal of the buyer (as meant in
art. 31(b) CISG) when the seller assigns his right of having the goods handed over to the buyer or
when he directs the storekeeper to hand over the goods to the buyer. With the long distance sale, it
suffices when the goods are placed at the disposal of the buyer (in the sense as explained above).
The buyer is not bound to take over the goods.

This causes the risk of non-performance to pass to the buyer. The risk passes according to art. 69(2)
at the time in which delivery is due and the buyer is aware of the fact that the goods are placed at
his disposal at that place (knowledge of the notification). In this case, there can be a time gap as
well, namely between the sending off of the notification and the awareness thereof by the buyer.
The seller is in that case not obliged to deliver once more and the buyer is not obliged to pay the
purchase price when the goods are lost or damaged by accident.

IV. Can one revoke an identification?

Is the seller bound by his identification of the goods to the contract? When one looks at this
reasonably and takes into account the trade customs, the buyer must be placed in the position to
otherwise dispose of the goods which are meant for him from the time in which the risk has passed.
The seller is therefore bound by his identification of the goods.

Legally, however, one is allowed under certain circumstances a revocation of an already carried out
identification. The question whether the revocation is allowed depends on whether or not the
buyer has a special interest in the identified goods. When such a special interest exists, he is not
bound to accept an offer of substitute goods. For example, in the case in which a quality test has
already been performed on the original goods. When the seller revokes the identification, he is
bound by that himself as well. His obligation to deliver revives and the risk passes back to him.

In the overseas trade, there is no disagreement about the fact that the seller is not allowed to revoke
the notice of consignment, meaning that he is bound by the identification he has carried out. The
reason is that the buyer often resells the goods after he has received the notice of consignment.

E. Passing of risk in non-accidental cases

I. Art. 66 (ii)

As explained in I.1., art. 66 CISG only deals with the passing of the risk of having to pay the
purchase price when the goods are lost or damaged by accident. According to art. 66(ii), the buyer
does not bear the risk when the goods are damaged or lost after the time of passing of risk, which
follows out of articles 67-69, when the loss or damage is due to an act or omission of the seller.
When an act or omission of the seller causes the loss of or damage to the goods, the buyer is
released from his obligation to pay the purchase price.

In cases where the act or omission by the seller constitutes a breach of contract as well, the liability
of the seller can also be deduced from art. 36(2). Under art. 36(2) the seller is liable for any lack of
conformity which occurs after the time in which the risk has passed and which is due to a breach of
any of his obligations. The consequence thereof is that the buyer, in order to preserve his remedies,
must observe the examination and noticing obligations of art. 38 et seq. CISG. To differentiate this
from art. 66(ii), art. 66 also applies to cases in which the seller did not commit a breach of contract
in the sense as meant in art. 45 et seq. CISG. These are cases of positive breaches of contract
(Positive Vertragsverletzung = PVV: breaches of care). The buyer cannot exercise his rights out of
art. 46 et seq., but the seller bears the risk.

How does one judge the case, in which the loss of or damage to the goods is caused by a lawful act
or omission by the seller (e.g., when the seller prevents the handing over of the goods to the buyer
under art. 71(2) CISG ("right of stoppage") and during this period the goods are damaged or lost by
accident? If one would follow the text of the provision, the buyer is not bound to pay the price in
this case as well. Another opinion is that lawful conduct of the seller should not cause the risk to
pass back to him. This last opinion is to be preferred, because it conforms with the aim of art.
66(ii). Conduct which is contrary to the seller's obligations, releases the buyer of his obligation to
pay the purchase price, but lawful conduct does not.

Current opinion is that with acts contrary to obligations, any breach of obligation is meant,
including other duties of care. A minority opinion looks at art. 36(2) CISG and argues that by act or
omission, only breaches of contract are meant.

The CISG does not expressly regulate the case in which the loss of or damage to the goods is
caused by an act or omission by the buyer. Only the case in which the buyer does not take delivery
in due time when the goods are placed at his disposal, is regulated in art. 69(1). The risk passes to
the buyer in that case. One could look at art. 80 CISG, that states that a party may not rely on a
failure of the other party to perform, to the extent that such a failure was caused by the first party's
act or omission. In connection with art. 7(2) CISG one can deduce from art. 69 the general
principle that the risk passes to the buyer in any case, when the seller is not able to transfer the risk
because the buyer is in breach of his obligations. In connection with art. 66 CISG this means that
the risk passes to the buyer and that he must pay the purchase price because he cannot invoke his
right of breach of contract by the seller.

II. Art. 70

Until now, the rules concerning the passing of risk have been explained in the cases where the
contract goods are lost or damaged, either by accident (B,C,D) or by acts or omissions of the seller
or the buyer (E.I). However, how can one judge the case in which the breach of contract by the
seller and the loss of or further damage to the goods have nothing to do with one another, in which
the loss of the goods is caused by accident, regardless of the fact that the seller has breached the
contract?[8] The most common case is the situation in which the seller has delivered goods which
lack conformity and which are then lost by accident. The delivery of goods lacking conformity
constitutes a breach of contract according to arts. 35, 36, 46(2), 51 CISG.

Article 70 CISG states that if the seller has committed a fundamental breach of contract, articles
67, 68, 69 do not impair the remedies available to the buyer on account of the breach. Art. 70 CISG
extends art. 66(ii) by keeping remedies available when the seller commits a breach of contract and
at the same time the goods are lost by accident, independent of the breach of contract by the seller.
The fact that the seller has committed a fundamental breach of contract as meant in art. 25 CISG
does not prevent the risk from passing to the buyer under the provisions of arts. 67-69 CISG.

Where the buyer can reject the goods lacking conformity pursuant to either the remedy to declare
the contract avoided under art. 49(1) CISG or the remedy to require substitute goods under art.
46(2), the seller bears the risk since the execution of these remedies causes the risk to fall back on
him. In both cases it is a prerequisite that the breach of contract is fundamental, as meant in art. 25
CISG.

Should the buyer choose the remedy of art. 46(3) to correct the lack of conformity by repair or of
art. 50 to reduce the price in the case in which the breach of contract is fundamental, he can no
longer declare the contract avoided. When the goods are damaged or lost after the buyer has
declared a reduction of the price or asked for the remedy of the lack of conformity by repair, he
remains bound to pay the previously reduced price or - in case of the remedy - the full price. In case
the goods are damaged by accident before the price reduction or remedy by repair has been
exercised, the buyer can only reduce the price to the extent of the original breach of contract and
also only for the part asking for remedy by repair, but not for damages which occured afterwards.
The buyer bears the risk for this when he chooses not to declare the contract avoided.

When the buyer claims damages (arts. 45(1)(b), 74 et seq. CISG), he can only claim damages
which are justified by the (fundamental) breach of contract, not damages which occurred
accidentally after the risk had passed to the buyer.

When there is a non-fundamental breach of contract, it follows from articles 70, 49(1)(a) CISG that,
in spite of the breach of contract, the risk passes to the buyer at the time in which the normal
conditions for the passing of the risk are fulfilled and that the risk cannot be transferred back to the
seller retroactively, because the remedies of declaring the contract avoided or of requiring the seller
to remedy the lack of conformity by repair are excluded in cases in which the breach of contract is
not fundamental. The risk passes normally according to articles 66 et seq. CISG.

This discussion also applies to other breaches of contract by the seller. When the seller is too late in
forwarding the goods, they travel at his risk when the buyer can exercise the remedy to declare the
contract avoided because of this breach of contract.

According to current opinion, the seller fulfills his obligation to deliver (act of performance) in
handing over the goods or placing them at the disposal of the buyer regardless of whether the goods
are in conformity with the contract. Therefore, there is no difference in the passing of the risk of
non-performance.

Some standard contracts even exclude the CISG completely, e.g., the contracts of the Federation of
Oils, Seeds and Fats Association (FOSFA) and the Grain and Feed Trade Association (GAFTA).

Especially Incoterms (International Commercial Terms) of the ICC (International Chamber of
Commerce) are often applied. Incoterms are the delivery clauses most frequently used in
international trade. They determine the ways of delivery and divide the costs and risk.

In commercial trade, the clauses are often applied by incorporating abbreviations in capitals into
the contract, as explained in the next part of this chapter. Incoterms can be divided into four groups
according to the degree of obligations the seller has with regard to forwarding of goods:

a) The E-clause (EXW) does not contain any more obligations for the seller after he has placed
the goods - which are in conformity with the contract - at the disposal of the buyer. EXW is
therefore a collect-clause.

b) The F-clauses (FCA, FAS, FOB). The seller has to take care of the transport until the goods
are handed over to the agreed carrier, but he does not have to conclude a contract of carriage nor
pay for the main transport.

c) The C-clauses (CFR, CIF, CPT, CIP). The seller is bound to pay the main transport until the
place of destination. The seller fulfills -as with the F-clauses- his contractual obligations in the
country of dispatch. The seller bears the risk of loss of or damage to the goods until the goods are
handed over to the main carrier. In contrast to FOB, the seller must bear the costs and bring the
goods to the determined port of destination and take out an insurance for the transport overseas.

d) The D-clauses (DAF, DES, DEQ, DDU, DDP). The seller has to take care of the arrival of the
goods at the place of destination at his own costs and risks. Whereas the C-clauses constitute
forwarding clauses, the D-clauses constitute arrival clauses.

Incoterms 1990 state in ten points the obligations of the seller at the left hand side (A) and on the
opposite side the obligations of the buyer (B). The passing of risk is regulated in section A 5
(seller's obligations)/ B 5 (buyer's obligations). With the E-, F- and C-clauses, the risk passes at the
time in which the goods are placed at the buyer's disposal or are handed over to the carrier, with the
D-clauses, however, the risk does not pass until the goods have arrived at the place of destination.

Most writers ask for an explicit inclusion of Incoterms in the contract in order for Incoterms to
become valid. A different opinion is that Incoterms are trade usages as meant by art. 9(2) CISG.
However, the most certain way is to include Incoterms explicitly, by which they become part of the
contract as an individual clause.

When Incoterms are not explicitly included, other trade terms are, according to current opinion,
interpreted in the same way as Incoterms in the area of application of the CISG. The interpretation
is made in the way of the so called "complementary interpretation of a contract" [10], unless the
contracting parties have concluded an explicit interpretation which differs from that of Incoterms
(a difference that will follows out of the contract), or practices between the contracting parties are
ground for a different interpretation (art. 9(1) CISG) or, the clause concerned is explained
differently from Incoterms, but in the countries of the contracting parties the interpretation
corresponds.

It would go too far to explain all Incoterms and all the different ways of delivery in this. The
application of which Incoterm in which case is explained in connection with the CISG. Then, the
two most frequently applied Incoterms are explained in more detail, especially in connection to the
passing of risk.

In the case of sale of goods in transit, there is no special clause available. However, the parties
often agree upon the CIF clause.

Art. 69 (1): Local sale

In the cases where a debt is collectible at the debtor's domicile, one can incorporate the EXW
clause.

Art. 69 (2): Debt payable at debtor's domicile

Here the clauses DAF, DES, DEQ, DDU, DDP can be applied.

The following must be said in relation to art. 66(ii) and art. 70 CISG. Incoterms do not contain
provisions that deal with acts or omissions of the seller which cause the loss of or damage to the
goods. In this case, art. 66(ii) applies normally. When the goods are lost or damaged independently
from the breach of contract, art. 70 CISG applies, since this deals with secondary remedies, which
follow out of the breach of contract. Incoterms do not regulate this.

B. FOB (Free on board)

I. Contents of the FOB clause

According to the FOB clause (which contains the name of the port at which the carriage overseas
shall begin) the seller has to bear every risk of loss of or damage to the goods until the goods have
passed the ship's rail at the determined port of shipment, under the conditions of provision B 5.

1. Passing over the ship's rail

At what time have the goods passed the ship's rail?

On the one hand, one could argue that with FOB contracts the risk passes at the time in which the
goods actually pass the ship's rail for the first time. According to this view, it is irrelevant whether
the goods are still undamaged at the end of the loading or whether they have been damaged because
of an incident which occured after the actual passing of the ship's rail. From the time in which the
goods have passed the rail, the buyer bears the risk. However, it will be difficult to prove that the
goods actually did pass the ship's rail before they were damaged by falling down. In this case, the
place where, the goods have landed would be decisive: still at the quay or in the water (seller's risk)
or already on deck (buyer's risk).

On the other hand, one could argue that with FOB contracts the risk does not pass until the goods
are safely loaded on board and the loading has come to an end. The risk passes at the time in which
the goods are placed on board (for the first time). When the goods fall on the quay or on deck, the
seller bears the risk. A minority opinion states that an FOB transport has ended at the time in which
the larger part of the goods or the excess weight has passed the ship's rail.

The second view is to be preferred, since according to the text of the FOB clause, the seller has to
deliver the goods "on board". This also constitutes a moment which can be easily determined in
practice and which avoids problems of evidence.

Actually, the time of passing of the ship's rail is not very appropriate to determine the passing of
risk in modern trade. Usually, the goods are forwarded as collective cargo in containers. The
forwarding often takes place in the form of combined transport, meaning that the goods are
forwarded by two or more subsequent different means of transportation, which serves one uniform
forwarding purpose. For example, forwarding the goods by truck to railway, from there to a seaport
and by ship overseas and then transport by rail. That's why the so called Combiterms are often
applied, which advance the time in which the risk passes to the time in which the goods are handed
to the first carrier at the assemly point of the goods, the terminal.

2. Obligations of the buyer and the seller

When the parties agree to add to the actual obligation to deliver, the clause "stowed" or "stowed
and trimmed", the seller is bound not just to deliver the goods "on board", but also to stow or trim
the goods at his own costs. The time in which the risk passes does not change, this remains the time
in which the goods pass the ship's rail.

The seller is bound to deliver the goods at his own costs at the named vessel (named by the buyer)
in the agreed port of shipment at the time or within the period agreed upon in the contract (without
regard to the place from which the goods are dispatched!). Contrary to the CIF clause, he is not
bound to take out insurance for the transport overseas; this is part of the buyer's obligations. The
buyer has to provide for the necessary loading capacity on a vessel. He has to conclude a contract
for the carriage of goods overseas.[11] When he does not do so in due time and the seller is thus
unable to load the goods, the risk passes to the buyer at the time in which he fails to conclude the
contract.

The FOB seller is bound to provide for the usual loading documents (a bill of lading [12]) at his costs,
as evidence that he delivered goods which are in conformity with the contract.

The FOB buyer has the right to and is obligated to determine the time of shipment more precisely
by a so-called FOB instruction. Such FOB instructions contain a notification about the name of the
vessel in which the loading space has been reserved and about the exact date, at which the vessel
can take over the goods.

As with the CIF contract, the FOB contract is often used for the sale of unascertained goods.
However, the identification of the goods does not constitute any problems with the classic FOB
contract. The loading of the goods causes the clear identification of those goods to a certain
contract, since it is the buyer's obligation to provide for the loading space in the vessel. Sending a
consignment notice or a bill of lading respectively does not alter the fact that the goods are
identified at the time in which they pass the ship's rail.

II. Extended FOB contract

Nowadays, parties often agree that the seller instead of the buyer, is bound to reserve the loading
space on a vessel, at buyer's costs (compare art. 32(2) CISG). This is called an extended FOB
contract. In this case, no FOB instructions are necessary, since the seller himself has knowledge
about the exact date of delivery and future docking place of the vessel, because he has reserved this
himself. With the classic FOB contract, the identification of the goods to the contract takes place at
the same time in which the risk passes, namely at the time of delivery of the goods on board. This
applies to the extended FOB contract as well. The fact that the seller and the buyer are in an order-relation to one another does not change the fact that, with an extended FOB contract it is still the
buyer's obligation to take care of the shipment of the goods. When the vessel does not arrive in
time, the buyer defaults in taking delivery of the goods and the risk passes to him, since there has
been no change in the buyer's obligation to provide for a vessel.

C. CIF (Cost, Insurance, Freight)

I. Contents of the CIF clause

1. In general

In the cases of carriage of goods in modern trade overseas, parties often agree upon the CIF clause.
Under the conditions of B 5 the seller bears every risk of loss of or damage to the goods until they
have passed the ship's rail in the port of shipment. The buyer bears every risk of loss of or damage
to the goods from the time in which the goods have passed the ship's rail in the port of shipment.
The notion of "passing of the ship's rail" has the same meaning as explained above for the FOB
contract (B.I.1).

The seller is bound to conclude the contract of carriage of the goods overseas on a vessel from the
port of shipment till the port of destination at his own costs (compare art. 32(2) CISG), to load the
goods on board of the vessel at his costs, to insure the goods at his costs, to have the carrier issue a
bill of lading, an insurance policy and the bill and hand these over to the buyer as soon as possible
(compare art. 34 CISG). The risk passes to the buyer at the port of shipment, so he bears the risk of
the transport overseas.

2. Floating goods

Incoterms 1990 do not contain a special provision for the sale of floating goods. However, parties
often agree upon the CIF clause in these cases. The objects of such CIF contracts are usually
unascertained masses of goods, e.g., raw products. The seller ships the goods without identifying
them with the name of the buyer. He has the bill of lading issued to his own order.[13]

When the parties have incorporated the CIF clause, one can basically assume that the seller has
fulfilled his obligation to deliver under Incoterms 1990 in handing over the goods to the carrier at
the place of shipment (place of loading), that means retroactively in handing over to the carrier,
except when the seller knew or ought to have known, at the time of conclusion of the contract, that
the goods had already been lost or damaged and he did not inform the buyer about this. According
to A 4 CIF Incoterms 1990, the handing over of the goods at the place of shipment is regarded as
the fulfillment of the act of performance. However, Incoterms do not contain an express provision
for this case.

As a result of the agreement to apply the CIF clause in case of selling floating goods, the legal
position differs fundamentally from the one under the CISG (Chapter 1 C.II.).

Under the CIF clause the risk passes retroactively to the buyer at the time in which the goods are
delivered on board at the port of shipment, except when he knew or ought to have known about the
damage or loss of the goods. Under the CISG, the risk passes at the time of conclusion of the
contract or, in case there is a transport insurance, at the time of handing over the goods to the
carrier who issued the documents embodying the contract of carriage (art. 68 CISG). Under certain
circumstances, the risk passes later, namely at the time in which the goods are identified to the
contract. For example, the passing of the risk ex nunc at the time of sending the consignment notice
(Chapter 1, B.I.4.).

As mentioned above, the object of the sale of floating goods might be a collective freight. The CIF
clause asks for the sending of a consignment notice in A 7, with which the identification to the
contract takes place.

II. Payment

1. Ways of payment

When the CIF clause is incorporated, it is often agreed that the seller will get payment on
presentation of the documents (payment against documents) [14], or that the buyer will open a
documentary credit. This must be expressly agreed because Incoterms do not regulate the ways in
which the purchase price might be paid. Under the CISG the buyer must pay the purchase price
when the seller places the documents controlling the disposition of the goods at the buyer's
disposal, when nothing else is agreed (art. 58 CISG).

When the parties have agreed upon a documentary credit to be opened by the buyer, the bank will
only pay against presentation of the necessary documents. The documents which have to presented
are, among others, charter party (written evidence of the fact that a freight is made available for the
carriage of goods: voyage-, time- or bare boat charter), bill of lading, multimodal transport
document, insurance documents, financial documents.

The buyer opens a documentary credit, when he requests his bank to pay the price to the seller
against documents (the letter of credit specifies which documents [15] the seller/beneficiary has to
present). The buyer can also request his bank, that it will accept a bill of exchange drawn by the
seller/beneficiary on the issuing bank or that the confirming bank negotiate a bill of exchange and
that the issuing bank pays.

The buyer has a special interest in the security of the documents, since he has to rely on the
description of the goods in the documents. By issuing a documentary credit, the buyer performs in
advance. Normally, the buyer is only willing to pay when he is in control of the goods and can
examine them whether they are in conformity with the contract. By agreeing upon a documentary
credit, the parties aim at a quick and secure payment to the seller.

The buyer has the advantage, that he has the disposition of the still floating goods with the
documents (if a bill of lading [16] is involved). In case the buyer does not want to resell the goods
during transport, there is no need for a bill of lading to be issued. In this case, a seawaybill which
does not constitute a right of disposal of the goods, but only gives proof that the goods have been
delivered on board and that there is a contract of carriage suffices.

Another advantage is that from the beginning it is clear how much the goods cost, since the CIF
price includes the price of the goods, the costs of tranportation and of the insurance.

Incoterms as delivery clauses are only concerned with transport documents as far as they are
relevant for the delivery of the goods and their handing over to the buyer. An example is a board-receipt, which proves that the seller has delivered the goods on board. Incoterms do not contain any
provisions about the documents which are necessary in connection to the payment of the purchase
price or to payment against documents and documentary credits.

2. Role of the bank in documentary credits

The bank can be involved in different ways. The bank that issues the documentary credit is called
the "issuing bank". Usually, the issuing bank authorizes a bank in the country of the seller to
control the documents. This bank is called "advising bank". This bank only checks the documentary
credit for its authenticity. The issuing bank can also authorize another bank (a so-called
"nominated" bank) to accept the documents of the documentary credit against payment. This bank
does not undertake an independent obligation to pay. The nominated bank pays by order and for the
account of the issuing bank and can take recourse on the issuing bank.

The bank in the country of the seller can undertake an independent obligation for payment. The
seller has an independent claim on this so called "confirming" bank. After checking the documents,
the confirming bank pays the purchase price and sends the documents to the issuing bank, which,
after checking the documents, pays the purchase price "back" to the confirming bank. The issuing
bank charges the buyer's (applicant) account to the sum of the purchase price.

The parties to the documentary credit are the issuing bank and the seller (beneficiary) and
potentially the confirming bank, not however the buyer (applicant). The documentary credit is
independent from the underlying contract. The buyer (applicant) cannot prevent the issuing bank
from paying against the documents in case the goods lack conformity. The bank does not check
whether the underlying contract has been fulfilled correctly. The bank only checks the appearant
conformity of the documents.

3. Practice

For clarity, a short description of how things go in practice will follow. The seller arrives at the port
of shipment with his goods. He hands them over to the carrier. The carrier issues the documents
which confirm that he has received and checked the goods and found that they were okay (clean
bill of lading). The bill of lading gives proof of receipt of the goods on board and that there is a
contract of carriage. It also presents the goods (document of title) and gives the holder the right to
take over the goods at the place of destination. The bill of lading places the buyer in a position in
which he can dispose of the goods in such a way as if he really already had the goods at his
disposal. The seller hands over these documents to the issuing bank (or the advising/confirming
bank and this bank sends the documents to the issuing bank). After checking the documents, the
bank pays the seller. The bank charges the account of the buyer and hands over the documents to
him. (In case the buyer is insolvent, the bank has the documents and can recoup its loss out of the
goods). The buyer goes to the port of destination and shows the documents which give him the right
to get the goods handed over to him, to the carrier.

D. Container transport

I. Contents

As mentioned earlier, goods are nowadays practically always forwarded in containers. That is the reason
for the following short insertion about the container system. This must be regarded as differing from the
notion of a single container in a cargo. The single container as a packing box, belongs to the system of
conventional handling of goods. With the notion of container transport is meant, the sale of goods on
vessels which only carry containers.

The container transport takes place with containers of standardized sizes, so called ISO-containers (so-called after the International Standardisation Organisation) and the containers are interchangeable. The
transport overseas takes place with so-called full-container vessels, which only carry containers. Two
notions are important: LCL and FCL. With LCL (less than container load) the freighter forwards less
goods than one container can comprise, with FCL (full container load) goods which suffice for a full
container.

With LCL, the freighter delivers individual goods to the terminal of the carrier. In the port of arrival these
individual goods are to be delivered at the terminal of the recipient. The transport in containers, the
packing beforehand and the unpacking afterwards are internal courses of events of the carrier. The carrier
can weigh and measure the goods and can determine their condition, etc. and put the corresponding
loading clause in the bill of lading.

With FCL, the subject matter of the contract is the carriage of goods in containers. The freighter himself
packs the containers and delivers them; the recipient collects the containers and unpacks them. The carrier
is deprived of knowledge about the cargo in the container. He will put an "unknown" clause in the bill of
lading and will not issue a clean bill of lading.

II. Passing of risk

The only and final possibility to say anything about the amount of, condition of, or kind of goods is the
time in which the goods are loaded into the container. As explained in Chapter 1 B.I., the risk passes,
when the contract involves carriage of goods, with the handing over of the goods to the carrier. The
opening of containers is very inefficient and therefore checking the goods at the time of delivery is usually
impossible. It remains uncertain, whether damages occurred before or after the passing of the risk.

This problem is not solved by law or by Incoterms. Finke tries to solve this problem by defining the
containers as loading space shifted outwards. The risk passes to the buyer at the time in which the goods
pass the container wall, thus in cases where the seller loads the goods the risk passes at the time in which
the goods are loaded into the container. Where the carrier stows the goods himself, the risk passes to the
buyer as soon as the goods are handed over to the carrier.

When one looks at containers as usual packing material, the risk passes at the time of passing of the ship's
rail with FOB and CIF sales. This is not justified because the possibilities of the seller to deliver end at the
container terminal of the port of shipment. The sea carrier determines and directs the delivery of goods
stowed in containers on board the container vessel. There is always a handing over to the carrier or his
representatives involved, before the shipment takes place.

Actually, there is no solution to this problem, since the container transport has developed itself in practice.
The available provisions are not suitable. It all comes down to the onus of proof.[17]

More appropriate for container transport is the FCA-clause: the risk passes to the buyer at the time
in which the goods are handed over to the carrier nominated and instructed by the buyer or to other
nominated persons by the buyer, e.g., forwarding agent (compare the already mentioned
Combiterms) at the agreed place (place of delivery). The carrier has to take over the goods.

E. Other frequently applied clauses

I. EXW

Here, the clause EXW has to be mentioned, because this clause is often incorporated into the
contract and differs the most from art. 69(1) CISG (debt collectible at debtor's domicile). For
delivery and thus for the risk to pass to the buyer, it suffices under the EXW clause to make the
goods available at the place of delivery. The goods are placed at the disposal of the buyer when
they have been sorted out, packed and the buyer has been notified. The buyer bears the risk from an
earlier time than stipulated in the provision of art. 69(1) CISG, according to which the risk does not
pass to the buyer until the goods have been taken over by him.

II. DEQ

When the parties agree to delivery ex ship (DEQ), the seller bears the risk of the sea transport. This
is a so-called arrival contract. The risk passes when the goods are placed at the disposal of the
buyer at the port of destination.[18] The question is, whether the buyer has to take over the goods
before the risk passes or whether the risk already passes with delivery of the goods on the quay in
the port of destination. The different clauses (Incoterms, German Trade Terms, UCC, ECE-Delivery clauses) all state something different. Since there is no conformity in this case, the best
thing would be to incorporate into the contract the exact meaning of the clause.

It is to be preferred that "placing the goods at the disposal of the buyer" suffices for the passing of
risk. With placing the goods on the quay, the goods are placed at the disposal of the buyer, meaning
that the goods can be picked up by the buyer. However, it is a prerequisite that the necessary
documents are handed over to the buyer. Otherwise, the goods would not actually be placed "at his
disposal". It is not necessary for the buyer to pick up the goods in order to make the risk pass.

Usually, another clause is incorporated as well, namely "no arrival - no sale". This clause states
that the seller is discharged from his obligation to perform when the goods are lost after the
shipment and during the transport overseas. The risk of having to pay the purchase price passes
when the goods are placed at the buyer's disposal at the place of destination, the risk of non-performance already passes when the goods are loaded on board. With an arrival contract, solely
placing of the goods at the disposal of the buyer does usually not identify the goods to a certain
contract, as with the CIF sale. The identification takes place by sending a consignment notice.

The BGB has regulated seperately the sale of goods in kind and the ending of the seller's obligation to
deliver in §§ 243(2), 279, 300(2). As explained in chapter 1 (A.III), no impossibility can occur, as long
as performance out of the mass of unascertained goods is still possible. As long as only unascertained
goods are owed, the seller is liable for his inability to perform under § 279, also in the case in which he
has not been negligent. He would not be discharged until the total mass had perished. With that, § 279
BGB regulates the risk of non-performance for unascertained goods.

When the seller of unascertained goods has done everything he was obliged to do under the contract,
identification of the goods takes place according to § 243(2): "When the debtor has done everything
necessary as far as he is concerned, to deliver unascertained goods, the debtor/creditor relations are
confined to this good. When this identified good gets lost by accident, impossibility occurs and the seller
is no longer bound to re-deliver under § 275(1) BGB. The seller has been discharged from his obligation
to perform. From the time of identification, the buyer bears the risk.

The kind of debt determines the contents of what is "everthing necessary" .With a forwarding debt (the
seller has to forward the owed goods to the buyer) [20], the risk of non-performance passes to the buyer at
the time in which the goods are duly forwarded. With a debt collectible at debtor's domicile,[21] the
seller has done everything necessary when he sorts out the goods that are determined for the buyer,
places the goods at his disposal and notifies him thereof. In case of a debt payable at debtor's
domicile, [22] the seller has done everything necessary as meant in § 243(2) BGB, when he has actually
brought and offered the goods to the buyer at his domicile, place of business or other third place. If there
are any special features in this area, they will be explained with each paragraph.

When the debtor of unascertained goods cannot do everything necesary as meant in § 243(2) BGB
because of lack of cooperation of the creditor and therefore he cannot identify the goods according to §
243(2), identification does take place at the time in which the creditor is in default in taking delivery (§
300(2) BGB).

2. "Not liable for"

§§ 275, 279, 323 mention the phrase "not liable for" The rules concerning the passing of risk only apply
in cases of accidental loss or damage. To make clear what is meant by "accidental", one can examine what
is meant by "non-accidental", thus, for which events the seller is liable.

According to § 276(1) BGB the seller is liable for intent and negligence. With intent is meant knowing
and wanting that the events which are decisive according to the law, occur. The notion of negligence is
explained in § 276(1)(ii) as disregard of the necessary care in trade dealings.

§ 277 deals with the care in one's own affairs. § 278 is also very important. According to this provision,
the debtor is liable for a fault caused by his legal representative or by persons who are performing one of
his obligations for him, in the same extent as a fault caused by himself. When the seller employs
assistants, he is liable for the fact that they might negligently breach obligations which are incumbent
upon him as debtor on the ground of the existing debtor/creditor relations between him and the buyer.

The seller is liable for defaults in adressing, packing or loading of the goods. The seller has to send the
goods in a condition in which they are transportable. For example, when fresh meat is forwarded, he must
provide a refrigerator truck. It is not allowed to forward the goods at a time which is inappropriate,
meaning that he may not forward the goods, when it is to be expected from the circumstances that the
goods will not arrive at the buyer or will not arrive undamaged.

The seller is not bound to insure the goods when such a clause is not incorporated. Trade customs (e.g.,
CIF clause) or the special circumstances of the case may, of course, establish an obligation to take out
insurance.

3. Passing of risk

What happens with the performance in return: the purchase price? Does the buyer have to pay the purchase
price when the contract is not performed (the object of the contract of sale/the goods), because the seller is
discharged from his obligation to perform according to § 275(1) BGB? According to § 323(1) BGB, the
seller loses his right to claim the purchase price in case the performance becomes impossible by an event,
for which neither he nor the buyer have to accept liability. It must be accidental. In that case the buyer is
no longer bound to pay the purchase price.

There are exceptions to the rule of § 323 BGB, in which the seller does not bear the risk of the purchase
price, but the buyer does. The buyer remains bound to pay the purchase price whereas he does not receive
the goods. Here, §§ 446 and 447 BGB apply. These paragraphs mention "the sold item" which leads to
the fact that the risk can only pass to the buyer when an identified good is handed over to the carrier, thus
after identification of the goods.[23] Before that, impossibility cannot occur.

In case of a debt to be forwarded (the seller is bound to forward the goods to the buyer), the risk of non-performance passes to the buyer when the goods are duly forwarded (A.II.1 b)). With the handing over of
the goods to the carrier, the seller has done everything necessary to bring about the achievement of the
contractual aim (§ 243(2) BGB). As a rule, identification will take place at the same time as the goods are
handed over to the carrier and the recipient is nominated (§ 243(2) BGB). When this identified good is
lost by accident, impossibility occurs and the seller is discharged from his obligation to perform under §
275(1) BGB. With the handing over of the goods to the carrier, the risk of non-performance passes to the
buyer.

The transport itself does not form part of the seller's contractual obligation when the contract involves
carriage of goods. The seller is not liable for defaults caused by the carrier or his assistants according to §
278 BGB. The so-called good faith performance obligations do continue to exist: the seller has to refrain
from all acts which might jeopardize the achievement of the contractual aim and he has to do everything
which may be expected to make the achievement possible.

II. Prerequisites for the passing of risk

"When the seller forwards the goods on request of the buyer to a different place as the place of
performance, the risk passes to the buyer as soon as the seller has handed over the goods to the
forwarding agent, the carrier or another person or institution destined to carry out the shipment", §
447 (1) BGB.

1. Forwarding to a different place as the place of performance

As an exception to § 323 BGB, § 447 firstly requires that the place to which the goods are to be
forwarded (place of destination) is different from the place where performance is usually to take place
(place of performance). In this case, a forwarding debt is at issue. This is also the case when the goods are
being forwarded within one place.

Therefore where the place of performance is, is decisive. This is firstly to be taken from the arrangements
between the contracting parties, secondly from "the circumstances, especially the nature of the
debtor/creditor relations". Commercial practices and customs are very important here. With forwarding
debts, e.g., coal and oil deliveries, usually a debt payable at debtor's domicile is at issue. Deliveries of
goods are, in case of doubt, forwarding debts in commercial trade.[24] When the place of performance
cannot be determined according to these rules, the place of performance is the place where the
seller/debtor had his place of business at the time of creation of the debtor/creditor relations,
according to § 269(1) BGB.

2. Forwarding from a different place as the place of performance

The seller often has the goods send directly to the buyer from a third person (the manufacturer). The
forwarding thus does not take place from the place of performance, but directly from a third place.
According to consistent case law,[25] the risk only passes to the buyer under § 447 (1) BGB when the
seller forwards the goods from the place of performance, unless the buyer has agreed to the forwarding
from a third place. In the case of forwarding from a different place, the risk only passes at the time in
which the goods are handed over to the carrier, when the buyer has agreed thereto. The seller may not
surprise the buyer with a transport risk, which the buyer could not take into account.

In a case before the LG Köln it was determined also, that where the contract of sale involves carriage of
goods and the goods are handed over by the seller not at the place of performance (here: Erfstad), but at a
third place (here: seller's warehouse in Düren) to mail, the risk passes at the time in which the goods are
handed over to mail. The prerequisite for § 447 BGB to apply is that the parties have agreed to forward
the goods from a different place as the place of performance.

When the goods are forwarded from a third place without the consent of buyer, the risk does not pass to
the buyer when the goods are handed over to the carrier. I am of the opinion that § 446(1) BGB should
apply. The seller bears the risk until the goods are handed over to the buyer.

The buyer must state the place of destination. This does not have to be his domicile or place of business.
The forwarding address can, at instruction of the buyer, also be a third place.

3. Forwarding at buyer's request

The goods must be forwarded at the buyer's request and this may not take place without or against his will.
§ 447 BGB is also applicable when the forwarding of the goods follows from a contractual obligation or
from a trade usage. When the seller forwards the goods without the buyer's request to do so, § 447 is
inapplicable and the goods travel at his risk until the goods are received by the buyer (§ 446(1) BGB).

4. Handing over

The goods are handed over, when the seller has done everything necessary as far as he is concerned, to
enable the transport to begin and to enable the delivery to the buyer. For this to be the case, the seller must
conclude any contracts of carriage. He has to choose the carrier with care. The seller has to physically
hand over the goods to the carrier. The carrier must obtain the goods in his care for the purpose of
carriage.

The seller is liable for an event in which the carriage does not take place because of an event for which he
has to accept liability in and which consequently causes the loss of the goods.

5. Carrier

§ 447(1) BGB mentions the forwarding agent, the carrier or another person or institution destined to carry
out the shipment. Contrary to the CISG, the handing over of the goods to the forwarding agent causes the
risk to pass.

At first, case law did not accept that the handing over of the goods to the people under the responsibility
of the seller would cause the risk to pass to the buyer, because the goods stay in control of the seller in this
case. A later judgment of the Reichsgericht took the opposing view. The literature [26] has followed this
opinion, but one should pay attention whether the facts of the case constitute a debt payable at
debtor's domicile, for in that case, the seller bears the risk.

When the seller employs his own men for shipment, the risk passes to the buyer when the goods are
handed over to these men. The seller keeps his rights to claim the purchase price in case the goods
are lost during transport when this is of no fault of his men.

The seller, however, is liable for faults caused by his employees, according to § 278 BGB.[27] This is
justified with the argument that the buyer should not be in a worse position by a transport by the
employees of the seller than by transport by complete strangers. Where an independent carrier
negligently causes damage the buyer bears this risk, since faults of carriers belong to the risk of
transport which has passed to him at the time in which the goods are handed over to the carrier.

6. Special features with goods in kind

According to § 447(1) BGB the risk passes to the buyer when the goods are handed over to the carrier.
Usually, this brings about the identification as well and thus the risk passes to the buyer at that time, since,
as explained in A.II.3, the goods must be identified before the risk can pass under § 447(1) BGB. In §
447(1) BGB the notion "the sold item" is mentioned and with unidentified goods impossibility can only
occur after identification (§§ 279, 243(2) BGB).

When the contract involves the carriage of goods, sorting out the goods usually takes place when the seller
dispatches the goods; marking of the goods by consigning them to the buyer, or by issuing a waybill
which identifies the buyer as the recipient. When this does not take place, the risk does not pass until the
seller has determined that the buyer is the recipient by an additional instruction to the carrier and the
carrier has handed over the goods to the buyer at the place of destination, § 446 BGB.

In case of a FOB or CIF sale, the risk passes retroactively to the buyer with the sending of the
consignment notice to the time of loading of the goods (Chapter 2). The sending of an endorsed bill of
lading also causes the risk to pass retroactively. The risk cannot pass retroactively when the seller has
knowledge of the loss of the goods.

When the seller has delivered to the carrier a mass of goods which is meant for several buyers, but is not
yet specified (collective mass of goods: an unidentified mass of goods of the same kind, e.g., coal, oil or
grain, which is sent in one cargo for several buyers), identification would not take place until the goods
are sorted out for every buyer. When the contracting parties have agreed to a collective cargo or when this
is usual in trade dealings, identification takes place at the time in which the goods are handed over to the
carrier and at that the time the risk passes as well. It is a prerequisite that the cargo is clearly identified for
all the buyers involved.

It can follow from a trade custom, that the sending of a consignment notice suffices for the identification.
The sending of the consignment notices works retroactively to the time when the goods were handed over
to the carrier. However, it is a prerequisite that the notice is dispatched in due time and that the seller was
in good faith at the time of sending of the notice or other documents, meaning that he had no knowledge
of damage to the goods and could not have known that they were damaged or lost when one applies the
standard of necessary care in trade dealings.

When the risk has passed, the buyer bears the risk of the full or partial loss of the collective cargo during
transport. Each buyer is liable for partial loss in accordance with their share in the collective cargo. When
the seller cancels the identification, it does not matter whether he is allowed to do so or not, the passing of
risk ends. The risk passes back to the seller.

III. Extent of the risk

With the notion "risk" is meant the accidental loss of or damage to the goods (text of §§ 446(1), 447(1)
BGB). Because the seller must be in the position as if the goods were already handed over to the buyer
with the handing over to the carrier, § 447 also applies when the goods are not delivered to the buyer or
at least not unrestricted. For example where the goods, which have been taken over by the forwarding
agent, cannot be localized or the case in which the goods are handed over to an unauthorized third person.

According to a widespread opinion, § 447 should only comprise typical transport risks. With typical
transport risks are meant the risks of accidental loss of or damage to the goods, such as theft, accident,
damage by temperature effects, delivery to the wrong recipient, unclearified whereabouts of the goods
(compare with the notion of "risk" in the CISG). These cases deal with such damage, which is caused by
the carriage or for which the carriage is jointly responsible.

A different opinion, however, states that when the carriage takes place at the request of the buyer, the
buyer must let himself be treated as if the goods had been handed over to himself. The buyer is therefore
liable for all risks from the time of handing over the goods to the carrier, e.g., delay, loss or damage to the
goods caused by a defect at the time of handing over for carriage, emergency sale in case of war or other
unusual trouble during transport or costs which occur because the goods must be diverted, stored or
reloaded.

This last opinion corresponds better to the idea of § 447 BGB. The notion "risk" means the risk of having
to pay the purchase price whereas one does not receive the goods and not the risk of actual endangering of
the goods by the carriage. The reason why the goods cannot be handed over the buyer is irrelevant for the
application of § 447 BGB.

IV. Liquidation of third party damages (Drittschadensliquidation)

When the sold goods are damaged by a third person (e.g., collision of ships) after they have been handed
over to the carrier (thus during transport), only the seller can claim on the ground of tort (unerlaubte
Handlung, § 823 et seq. BGB) since he is still the owner of the goods. Ownership does not pass to the
buyer until he actually has the goods in his possession (§ 929 BGB). When a document of title has been
issued, it is different since this represents the possession of the goods and handing over the document
causes the property to pass to the buyer according to § 929 BGB. In this case, the buyer has become the
owner of the goods by handing over of the documents and he can claim damages himself. The buyer has
no claims out of contract since he has no contract with the carrier.

The seller does not suffer any damage, because he can claim the full purchase price under § 447 BGB,
since the buyer bears the risk. Here, the legal position differs from the liability (the risk has already passed
to the buyer). The risk passes earlier to the buyer than the ownership.

This is a typical case of "liquidation of third party damages". In this case. the seller has the right to
liquidate the buyer's damages. The seller claims in the interest of the buyer. The seller must liquidate his
claims and assign the outcome to the buyer.

C. Passing of risk with goods in transit

I. Passing of risk of non-performance

1. Ascertained goods

There are no special features here, so § 275 (1) BGB applies.

2. Unascertained goods

a) Floating goods

German law does not have the notion of "placing the goods at the disposal of the buyer" as the CISG does
in art. 31(b). There are no special rules for the sales of floating goods. This is neither a forwarding debt
nor a debt collectible at debtor's domicile nor a debt payable at debtor's domicile. Basically, the risk of
non-performance and the risk of having to pay the purchase price pass to the buyer at the same time.[28]
One could therefore argue, that the seller has done everything necessary (§ 243 (2) BGB) when he
enables the buyer to take over the goods.[29] As a rule, this takes place by handing over a bill of
lading.[30] It is clear at that time which part of the goods is meant for whom (identification) since this
is embodied in the bill of lading. At that time, the risk of non-performance passes to the buyer.

b) Rolling goods

The sale of rolling goods is also not regulated when a collective mass of goods is involved, since
the sale of rolling goods usually involves identified goods. It remains unclear at what time the
seller has fulfilled his obligation to perform. One could argue, that the seller has fulfilled his
obligations when he gives the carrier the instructions for delivery.[31] At that time, identification
takes place. From that time on, the buyer bears the risk of non-performance.

II. Passing of risk

1. Floating goods

In German law the sale of floating goods is not expressly regulated, as mentioned above. First of
all, there has to be made a distinction between the sale of floating goods and of rolling goods. With
the sale of floating goods, § 447 should not apply because the carriage has already taken place and the
goods are already in the possession of the carrier. The carriage does not take place "at the request of the
buyer". According to case law, the risk does not pass to the buyer, according to § 446, until the
(endorsed) bill of lading has been handed over to him. The time in which the risk passes is thus the time in
which the buyer acquires ownership of the goods, since the bill of lading represents the goods.

However, the risk passes retroactively to the buyer from the time in which the goods are loaded, when the
buyer has agreed thereto, either expressly (by incorporating such a trade clause into the contract, e.g., CIF
clause) or tacitly, unless the seller knew or ought to have known about the loss of the goods at the time of
conclusion of the contract. This is justified with the argument that it is often unclear at what time the
floating cargo was lost or damaged and that the tying of the passing of risk to the handing over of the
documents prevents arguments between the contracting parties from arising.

2. Rolling goods

With the sale of rolling goods, § 447 is not directly applicable, since the carriage does not take place "at
the request of the buyer" and the goods are already in the possession of the carrier at the time of
conclusion of the contract. According to the judgments of the BGH, § 447 is applicable by analogy
provided for the fact that the risk passes to the buyer at the time in which the instructions for delivery of
the goods at the buyer's domicile or to a nominated third person are effectively given to the carrier.

As a rule, the buyer requests that the goods are to be delivered at a specific place, usually his place of
business. The seller must supply the goods to the buyer. This usually takes place by giving a
corresponding instruction about the carriage to the carrier. The seller has fulfilled his contractual
obligations by giving these instructions and therefore the passing of risk is tied to the instruction.

3. Special features for unidentified goods

As mentioned before, there are no special provisions for the sale of unidentified goods in transit. Because
the risk basically passes with the handing over of the goods - either to the carrier or to the buyer - , it
seems just to follow this concept for goods in transit as well.

a) Floating goods

With the sale of floating goods the risk passes to the buyer at the time in which the bill of lading is handed
over to him. At that time, it is clear which part of the cargo is meant for whom (identification). The
handing over of the bill of lading is the handing over of the goods to the buyer as meant in § 446 BGB
since the bill of lading represents the goods. However, the risk passes retroactively to the buyer from the
time of loading of the goods, when the buyer has expressly (e.g., CIF clause) or tacitly agreed thereto.

Here, I apply the regulation for the sale of identified floating goods. The provision that the risk passes
retroactively at the time of handing over the goods to the carrier is to be preferred, because this constitutes
a clear moment to determine the occurance of possible damage and because the tying to the passing of
ownership is not very practical or usual in international trade. One can avoid such evidence problems by
incorporating an arrival clause into the contract, such as "ex ship" or "ex quay". The seller bears the risk
during transport (until the place of destination).

b) Rolling goods

I see no reason as well to apply a different rule for the sale of rolling unidentified goods than the rule for
identified goods. The risk passes to the buyer at the time in which the instruction for delivery of the goods
is effectively given to the carrier. At that time it has become clear, for whom the goods are destined. By
giving the instruction, the goods are finally handed over to the carrier (§ 447(1) BGB analogous).

D. Passing of risk in residual cases

I. Local sale

1. In general

In the normal case regulated by law, movables have to be picked up by the buyer at the seller' place of
business or domicile (§ 269(1) BGB). As a rule, debts are debts collectible at debtor's domicile. As
explained in the introduction, § 446 BGB constitutes an exception to § 323 BGB. § 446(1) i) BGB
states that the risk of accidental loss of or damage to the goods passes to the buyer at the time in which the
goods are handed over to him. The second sentence about uses and burdens and the second paragraph
about property will not be discussed here. It is possible to agree to different regulations than the one of §
446 BGB.

2. Risk of non-performance

a) Ascertained goods

The risk of non-performance passes to the buyer according to § 275(1) BGB.

b) Unascertained goods

The debtor of a local sale has done everything necessary (§ 243(2) BGB) when he sorts out the goods
which are destined for the buyer (identification), places the goods at his disposal and notifies the buyer
thereof. The risk of non-performance passes to the buyer in that moment.

3. Prerequisites for the passing of risk

a) Conclusion of a valid contract of sale

The prerequisite for § 446(1) to apply, is the conclusion of a contract of sale. § 446 is not applicable
when a different contract has been concluded, e.g., commission. Furthermore, the contract must be valid.
In cases where the contract is void or contested and the goods have already been handed over, the
provisions of the law of enrichment (§ 812 et seq.) determine the risk in case the goods are lost or
damaged.

b) Sale of goods

Another prerequisite is, that it must be a sale of goods. § 446 only applies to the sale of goods, meaning
movables and immovables (§ 90 BGB).

c) Delivery

As said before, § 446 ties the passing of risk to the time of delivery because by acquiring possession the
buyer gets hold of the goods and the goods are thus in his care and for his risk. It does not suffice to place
the goods at the disposal of the buyer. It is not required that ownership passes as well. Basically, it is
required that the buyer obtains direct possession of the goods. The delivery must take place for the
purpose of fulfillment of the contract.

As a rule, delivery takes place when the buyer gets the actual control of the goods (§ 854(1) BGB). The
BGH decided in its judgment of 2 May 1997, that the seller is liable for the loss of containers which were
not placed at the buyer's business premises during opening hours. In this case the buyer did not have the
opportunity to get actual possession of the goods. When the execution of delivery (e.g., the loading of
available goods in trucks of the buyer) is an obligation of the buyer, delivery takes place at the time of
beginning of loading.

According to § 854(2) an agreement on acquiring possession of the goods suffices when the buyer is able
to control the goods; for example, when the goods are freely accessible, e.g., building land or wood. It also
suffices when the goods are delivered to an agent, assistant or employee of the buyer (§ 855 BGB).

It remains doubtful whether the acquirement of indirect possession of the goods suffices for delivery as
meant in § 446(1). One must differ between two cases, namely whether the seller is only bound to
transfer ownership according to §§ 930, 931 and not bound to deliver the goods or whether he is also
bound to deliver, meaning that he has to provide the direct possession of the goods. This is to be deduced
from the contractual agreement.

In the first case, the risk passes with acquiring indirect possession of the goods, for example, when the
goods have been let to a third person. The contracting parties can agree that indirect possession suffices
for the passing of risk.

In the second case, when the seller owes delivery but he cannot deliver yet (for example, the seller has to
keep the goods for the buyer or wants to use the goods on loan), the risk does not pass until the buyer
acquires actual possession of the goods (§ 446(1) BGB).

The risk passes to the buyer as well, when as a result of his conduct, which is contrary to the terms of the
contract, delivery cannot take place, according to § 324(2) BGB.

4. Extent of the risk

"Loss" means the physical destruction of the goods, and also the actual loss of the goods when the buyer is
irrevocably deprived of the goods and when the seller is unable to fulfill his obligations of performance,
e.g., due to theft or confiscation. When the confiscation is based on grounds which already existed before
the goods were handed over and which have their basis in the condition or origin of the goods or in the
person of the seller, the buyer does not have to accept liability. When the confiscation is based on
provisions of law which have been created after the handing over of the goods or due to irregular events
(confiscation by enemy troops), the buyer is liable for the period after the goods have been handed over to
him. Until the handing over of the goods, the seller is liable.

"Damage" means that the goods contain faults as meant in § 459 BGB. This relates to the phycisal
condition of the goods, to decreased quality.

"Accidental" means "caused by events for which neither the seller nor the buyer are liable". When the
seller is liable for the loss or damage, he is liable under § 325 or under the rules of PVV (positive breach
of care under a contract). When the seller is liable for the event causing the loss or damage, § 324 applies.

5. Special features for the sale of unascertained goods

With a local sale the risk of non-performance passes to the buyer, as explained in D.2.b), when the seller
has sorted out the goods and notified the buyer thereof. At that time, the seller has done everything
necessary. The risk to pay the purchase price does not pass until the buyer takes over the goods (§ 446(1)
BGB) or is in default of acceptance (§ 300(2) BGB). Here, the same time divergency can occur as in the
CISG with art. 69(1) and (2) (Chapter 1 D.II,III).

II. Goods in storage

1. Risk of non-performance

With the sale of stored goods, the seller has done everything necessary by handing over identifying
delivery notices. With that he has sorted out the goods (identification) and notified the buyer thereof. At
that time, the risk of non-performance passes to the buyer.

2. Passing of risk

§ 446 BGB applies to the sale of stored goods since this is not a contract involving carriage. The risk
passes to the buyer by handing over the goods (§ 446(1) BGB). Current opinion is that handing over a
warehouse warrant to order, issued by the storekeeper, causes the risk to pass (§ 424 HGB) because a
warehouse warrant to order represents the goods. It is a document controlling the disposition of the goods
(a document of title).

The question is, whether a delivery certificate suffices for the passing of risk. A delivery certificate
contains an instruction of the seller to the storekeeper to hand over the goods. Since a delivery certificate
is an instruction, it contains a double authorization, namely one for the buyer to have the goods handed
over to him and one for the storekeeper to hand over the goods to the person who is authorized by the
certificate. The delivery certificate is issued by the seller and therefore it does not give the buyer any
guaranties that the goods are actually at his disposal at the warehouse. The seller can also issue an
opposing instruction and the storekeeper can hand over the goods to another person without presentation
of the delivery certificate. A delivery certificate is not a document of title.

When the seller hands over such a delivery certificate to the buyer for the fulfillment of the contract, he
could, together with the delivery notice, assign his claim on the storekeeper (out of the storage contract) to
the buyer with the consequence that the buyer gets ownership of the goods under §§ 929, 931 BGB and
that the risk passes to him. This must however be incorporated in the contract. When there is no such
agreement, one must look at how the conduct of the parties may be explained.

Case law is not inclined to explain the handing over of a delivery certificate as assigning of the claim
against the storekeeper to hand over the goods and to connect the passing of ownership or risk to the
handing over of the documents. The seller thus bears the risk until the goods have been actually handed
over to the buyer.

When the buyer resells the goods by handing over the delivery certificate, the risk does not pass until the
goods are handed over to the last buyer. The seller can protect himself by including a time limit for
collecting the goods. When the buyer exceeds this time limit, he is liable under the provisions of default of
acceptance.

A time divergency exists where the seller hands over a simple delivery certificate and thus fulfills his
obligation of performance but where the risk does not pass until the goods are actually handed over to the
buyer, because a simple delivery certificate does not suffice for the risk to pass to the buyer.

III. Long distance sales

1. Risk of non-performance

The seller has done everything necessary as meant in § 243(2) BGB when he has actually brought the
goods to the buyer's domicile, place of business or third place on time and offered them to the buyer. His
debt is then restricted to the offered goods.

2. Passing of risk

When the goods have to be delivered to the place of business of the buyer, there exists a debt payable at
debtor's domicile. With a long distance sale, the goods have to be delivered at a third place (e.g., place of
business of the manufacturer). The risk passes to the buyer when the goods are handed over to the buyer or
to a third person nominated by the buyer, at the agreed place, according to § 446(1) BGB. At that time,
the buyer gets control of the goods. Indirect possession does not suffice, because in that case the goods are
not in the actual control of the buyer. The seller bears the transport risk.

It also suffices for the risk to pass, when the seller deposits the goods at the agreed place and when the
buyer is able to pick them up without further assistance of the seller.

When the buyer does not take over the goods, which are offered to him on time, he is in delay of
acceptance and the provisions of §§ 293 et seq. BGB apply. With the sale of unascertained goods the
debt of the seller is restricted to the offered goods as a result of the delay in acceptance (§ 300(2) BGB).
When the goods are lost during the delay by an event for which the seller is not liable, the seller keeps his
right to claim the purchase price according to § 324(2) BGB.

E. Passing of risk in non-accidental cases

When one of the contracting parties is liable for the impossibility to perform, §§ 324, 325 BGB apply.
These paragraphs remain unchanged in the law of sales. The §§ 446 and 447 only modify § 323, the
provision for the accidental loss of goods.

I. § 324 BGB

§ 324(1) BGB states that the seller can still claim the purchase price from the buyer when he cannot
perform as a result of an event for which the buyer is liable. The risk passes to the buyer, when the seller is
unable to transfer the risk under the normal rules because of buyer's conduct which is contrary to the
contract. One could say, that it is not allowed for the buyer to make it impossible for the seller to perform
by way of his conduct. For example, the buyer bears the risk when he does not pick up the goods which
have been placed at his disposal or when he does not give the necessary instructions for carriage or does
not nominate the vessel with FOB sales.

For the rest, the same rules apply as those stated for the seller in §§ 276 et seq. BGB.

II. § 325

§ 325 determines the consequences in law, when the seller cannot perform as a result of an event for
which he is liable. The buyer can sue for damages out of non-performance or withdraw from the contract
(§ 325(1)(i)) or enforce the rights mentioned in § 323 BGB (§ 325(1)(iii)). One has to differ between the
case of breach of contract by delivering defective goods and other breaches of contract in order to
determine the passing of risk when the seller's conduct is not in conformity with the stipulations in the
contract.

In cases where defective goods have been delivered and these goods get lost or damaged after the normal
passing of risk because of the defect, the seller bears the risk, because the buyer can cancel the contract
anyway, according to §§ 467, 350 BGB which causes the risk to pass back ex tunc and the buyer is no
longer obliged to pay the purchase price. It remains doubtful whether this also applies when the goods are
lost or damaged independent from their defect. Renck and Hager argree to this but Soergel/Huber are of
the opinion that the risk stays with the buyer.

When the seller or one of his employees breaches a secondary contractual obligation concerning orderly
carriage - with respect to the packing, loading or addressing of the goods - and this breach causes the loss
of the goods, the seller cannot invoke §§ 446, 447 BGB. He bears the risk. However, when the seller
breaches a secondary obligation for after fulfillment of the contract, he is only liable when the breach is
grave enough to justify that the effect of the positive breach of contract (PVV) is that the buyer may
invoke the right of cancellation of the contract and that the seller thus bears the risk of accidental loss
again, according to § 350 BGB.

3.
The connection of passing of risk and ownership applies in French law (Code Civil) and in the English Sale of Goods Act (Hager, in
Schlechtriem, Fachtagung, p.388).

4.
In the CISG, in the BGB and in the Uniform Commercial Code of the United States (Hager, in Schlechtriem, Fachtagung, p.389).

5.
The conclusion of a contract of carriage or of a contract with a forwarding agent by the seller is not necessary, when the seller is not obligated
by the contract to do so, e.g., FOB sales.

6.
Art. 31(b) includes the sale of goods in transit: Renck, p.95; Herber/Czerwenke, art. 31 Rdn.7; Karollus, p.110; different
opinion: Caemmerer/Schlechtriem in art. 31 Rdn.48, but they come to the same result in connection with the notion of
"placing at the disposal of the buyer" in Rdn.83.

7.
A delivery becomes mature at the time in which the debtor/seller is obligated to deliver and the creditor/buyer has the right to claim the delivery
(Musielak, Rdn.449).

8.
The seller bears the risk of loss of goods lacking conformity when the loss is caused by the lack of conformity/defect. When the buyer has caused
the loss, he has to bear that risk, art. 82(2a) CISG (Hager, Die Gefahrtragung beim Kauf, p.163-164,166).

9.
Compare with art. 346 HGB: A trade usage is, in commercial trade among traders, a binding rule, which is based on an actual practice and on the
consent of the circles involved. The practice must have been established during an adequate passage of time for comparable trade dealings Kolter, p.10).

10.
Renck, p.57-75; Hager, in Schlechtriem, Fachtagung, p.389. There are many different opinions in the literature concerning the incorporation and
explanation of trade clauses. I confine myself to refer to the clear discussion of this controversy in Renck: "Der Einfluß der Incoterms 1990 auf das
UNKR".

11.
The buyer as freighter concludes a contract with the shipper. Under German law, the kinds of contract for carriage overseas are:
Raumfrachtvertrag, Stückgütervertrag (§§ 556 foll. HGB), Zeitchartervertrag and Mengenvertrag (both developed in practice).

12.
Under German law, this document does not have to be a bill of lading in case of doubt. A board- or quay-receipt suffices as well, but it is the
obligation of the buyer to get the bill of lading at his own costs. Since he as freighter has to deliver the goods to the shipper under the contract of
carriage overseas, he as freighter can therefore claim that the carrier issues the bill of lading according to § 642 HGB (Finke, p.150-151).

13.
Under German law, the freighter can claim the issuing of a bill of lading as well (§ 642 (1) HGB). Freighter is the one who actually hands over
the goods to the carrier for carriage. Often, the freighter is identical with the discharger.

14.
"Payment against documents" means, that the buyer receives the documents sent by seller and is obligated to pay. This obligation to pay on
presentation of the documents, can also follow from the applicable law (e.g., from art. 58 CISG). When the buyer refuses to take over the documents
and pay because of evident lack of conformity of the delivered goods, the onus of proof is on him. When the buyer pays against the documents,
but after the delivery of the goods demands the purchase price back because the goods are defecient, the seller has to prove whether the deficiency
occured before or after the passing of the risk. (Hager, Die Gefahrtragung beim Kauf, p.127-130).

15.
The ICC has drawn up general rules in the UCP: "Uniform Customs and Practice for documentary credits". Some countries, e.g., France, accept
the UCP as customary law. Most countries, e.g., the Netherlands, Belgium and the United Kingdom, are of the opinion that the UCP, as Incoterms
must be expressly incorporated in the contract (Van Houtte, p.267).The UCP contain some special prerequisites in art.23 for the form of the bill
of lading, to make it presentable under a documentary credit. First of all, it must be an "on board" bill of lading. It must prove that the goods are
actually delivered on board a certain vessel. Secondly, the bill of lading must give proof of the contract of carriage and state the name of the carrier.
Lastly, it must be a clean bill of lading, meaning that it contains no specifications that the goods are damaged or deficient. Only for a documentary
credit must the bill of lading be clean, not however under Incoterms for these do not contain provisions for the documents of a documentary credit
(Bredow/Seiffert, p.54).

16.
Bills of lading are securities. They vest the contractual right against the carrier to hand over the goods in such a way that only the holder of that
document - or the one to whose order it is issued - can claim the right against presentation of the documents. The handing over of the bill of lading
equals the handing over of the goods. One can dispose of the goods without it being necessary that the goods are handed over. During the transport,
the buyer can exercise the rights over the goods by handing over the documents to a third party. In order to be a security document, the goods must
be taken over by the carrier at the time of issuing of the bill of lading and the goods must still be in possession of the carrier when they are handed
over.

17.
It would go too far to explain every single rule, so therefore I refer to a clear explanation of this in Finke, "Die Bedeutung der internationalen
Handelsklauseln für den Gefahrübergang nach deutschem und US-amerikanischem Recht", p. 181 et seq.

18.
The Incoterm provision for ex ship/ex quay states: "The seller must bear all risks...of the goods until such time as they shall have been effectively
placed at the disposal of the buyer."

19.
According to § 275(2) BGB, the inability of the debtor which occurs after the creation of the debtor/creditor relations, equals impossibility. In
case of inability, the debtor is unable to produce the owed performance. By the way, the seller is also discharged from his obligation to perform,
in case he does have to stand in for the impossibility, since something impossible cannot be produced. Here, the regulations §§ 280, 325 BGB apply
with secondary claims (Musielak, Rdn.401, 410, 411).

20.
The place of performance lies with the debtor, the place of fulfillment with the creditor. The place of performance is the place where the debtor
has to perform his actions of performance. Actions of performance are those actions which are necessary as far as the debtor is concerned, to enable
the achievement of the contract to occur. With the contract of sale the achievement of the actions performed by the seller is that the buyer obtains
property and possession of the goods. The place where this achievement takes place is the place of filfillment (Musielak, Rdn.183, 186).

21.
The place of performance and the place of fulfillment lie with the seller (Musielak, Rdn.183).

22.
In cases where both places are identical, when the seller thus has to perform his contractual obligations at the place of destination, a debt
payable at debtor's domicile exists, meaning that the the place of performance and the place of fulfillment lie with the buyer (Musielak,
Rdn.186).

24.
Staudinger/Köhler, § 447 Rdn.7; LG Köln, Urt. v. 07.06.1989, NJW-RR 1989, 1457: Debts of goods in commercial trade are, when seller and
buyer have their places of business in different places, in case of doubt forwarding debts.
BGH, Urt. v. 24.03.1965, NJW 1965, 1324: OLG Nürnberg, Urt. v. 11.17.1977, MDR 1978, 492; BGH, Urt. v. 05.12.1990, NJW 1991, 915-917:
The contracting parties had agreed to foward the goods directly from the third place. The risk passes to the buyer in this case, as soon as the seller
has handed over the goods at that third place to the person destined to carry out the transport.

26.
Larenz, Schuldrecht BT, § 42 II; Staudinger/Köhler, § 447 Rdn.30; Münchener Kommentar, § 447 Rdn.21; Palandt/Putzo, § 447 Rdn.8;
Soergel/Huber, § 447 Rdn.35 et seq.; Hager, in Schlechtriem, Fachtagung, p.392; different opinion: Hager in: Die Gefahrtragung beim Kauf, p.84:
He advocates a return to the old case law, according to which § 447 does not apply when the seller hands over the goods to his own men, taking
into consideration that the mentiones examples in § 447 all refer to independent enterprises. The history of this paragraph and a comparison with
foreign law would lead to the same conclusion.